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Teen credit  

post #1 of 21
3/21/08 at 12:08pm
Thread Starter 
I had an idea, and wanted to get some feedback as to what others think. I opened a small WalMart credit account ($125 limit) a while back, and seldom use it (because I don't generally shop at wm). Occasionally I'll stop there for something, and when I do I'll put it on the card and pay it off before I get charged interest, just to keep the account open and keep it as a positive on my credit. My idea is to add my teen (16) to this account as an AU user so that it reflects positively on his credit report. My thinking being that it's a start to good credit and may help him if he wants to buy a car or something when he turns 18, and he may be able to get it on his own.

I had horrible credit as a young adult, but my parents had (and still have lol) crappy credit and never taught me anything about credit cards, loans, etc. It's one thing I would like to do differently with my own children. At any rate, ds does have a job now (min. wage but it's enough for a 16yo) and I thought I might give him this WM card and allow him to use it so that he can learn to manage credit responsibly before being out on his own. It's such a small limit that even if he ran it up and didn't/couldn't pay it I could/would and therefore the danger of it reflecting negatively on my credit is very, very low.

Thoughts on this? Anyone done anything similar for your teen? How else can I help him learn about credit and how to use it responsibly rather than dig himself in a hole when he goes off to college? That is what happened to me, all those cc offers on campus were too tempting to pass up as a young adult, and I wound up in horrendous debt as a result.
post #2 of 21
3/21/08 at 12:47pm
i think it sounds like a good idea but i think that every pay check he should have to pay off as much as he has charged so therefor he realizes that its not free money and does have to be payed off. Kwim?
post #3 of 21
3/21/08 at 2:41pm
I was given a cc when I was 13 or 14. I never ran it up. I guess I just never understood why anyone would do that? (Barring emergencies, of course.)

My mom taught me that credit cards are tools, not "free money." I think just her explaining that to me and living it in front of me taught me the most. I didn't have a paying job at the time (and many of the things my cc was to be used for were "parental expenditures" anyway, like food), so my mom paid it off every month. But we would still talk about my totals, etc. I knew that if I spent an unreasonable amount of $$ (more than I could imagine my mom handing to me in cash), I would have to pay it back and then some. That kept me from EVER looking at me cc as "free money."

I wish I could be more helpful.
post #4 of 21
3/21/08 at 3:28pm
It won't work. Generally, authorized users do not get the information reported to the credit bureaus. I know this is the case with AMEX - they changed their policy recently due to fraud.
post #5 of 21
3/21/08 at 3:30pm
yeah, aurhorized user is different then co-signer and to co-sign he'd have to be 18 already.
post #6 of 21
3/21/08 at 4:14pm
Thread Starter 
Quote:
Originally Posted by llamalluv View Post
It won't work. Generally, authorized users do not get the information reported to the credit bureaus. I know this is the case with AMEX - they changed their policy recently due to fraud.
I think it depends on the card though, doesn't it? I am AU on dh's target and it shows on my CR. I wondered how that worked, as they never even asked for my SSN. I'm not certain how it found its way to my CR lol.

I can't be certain the WM one will report I guess, but even if it doesn't it will hopefully be useful in teaching him to use credit responsibly.
post #7 of 21
3/21/08 at 4:46pm
I don't think it is necessary. That is not to say he should not learn what these things are and how they are used responsibly. Believe me they will send him a credit card with a low limit when he turns 18 with zero credit history.

If you want him to practice paying the balance in full every month, get an account where he's AU for his use only and monitor it. But that sends the message that credit cards are the way it's done. Why not start a presumption of debit card use only? Why not start a presumption of buying a $2K car with cash instead of a $10K car on credit?
post #8 of 21
3/21/08 at 7:23pm
I'm an authorized user on my husband's Home Depot, Lowe's and Sears cards...all cards he had before we married, and he couldn't add me as a cosigner because my credit is shot. So, he just added me as an AU.

All three cards are reported regularly as positive accounts on my credit reports.
post #9 of 21
3/21/08 at 7:37pm
My parents added me onto one of their cards when I was 17. I was an authorized user and it DOES show up on my credit reports now! It was wonderful for me. When I was 18 I got my own card. I still have my first card and use it here and there when my parents need me to pick something up for them just to keep it active.
post #10 of 21
3/22/08 at 5:10pm
My parents did a really neat thing with me as a teen to help me learn to manage money responsibly. They gave me a "clothes allowance" for the year.

Basically, they figured out how much they were spending on clothing for me each year, tacked on a little extra money, and then said "We're giving you $X per year for clothing. You can spend it however you want. It has to cover everything (including the boring underwear/socks), so you should plan for those things. Also, if you spend it all by halfway through the year, we aren't giving you more until next year.

It was a great way for me to learn to handle money wisely (they even gave me a little account book to track how much I'd spent/on what/how much was left), and it also gave me a really nice feeling of autonomy in buying my own clothes (and not having to ask them for permission to buy a really nice expensive dress or something).

It wasn't a credit card, but I think it taught me much more in the long run.
post #11 of 21
3/22/08 at 6:24pm
Thread Starter 
Quote:
Originally Posted by Carlyle View Post
My parents did a really neat thing with me as a teen to help me learn to manage money responsibly. They gave me a "clothes allowance" for the year.

Basically, they figured out how much they were spending on clothing for me each year, tacked on a little extra money, and then said "We're giving you $X per year for clothing. You can spend it however you want. It has to cover everything (including the boring underwear/socks), so you should plan for those things. Also, if you spend it all by halfway through the year, we aren't giving you more until next year.

It was a great way for me to learn to handle money wisely (they even gave me a little account book to track how much I'd spent/on what/how much was left), and it also gave me a really nice feeling of autonomy in buying my own clothes (and not having to ask them for permission to buy a really nice expensive dress or something).

It wasn't a credit card, but I think it taught me much more in the long run.
Hey, that is a really good idea too! I'm happy to hear all your experiences. I just hate to think of him making the same mistakes I did and would love to teach him NOT to spend on a cc with the attitude that it's free money.
post #12 of 21
3/22/08 at 7:22pm
just don't do what my mom did! (not that I think you would!)

right after she and my dad divorced she started getting tons of credit card offers and calls, she signed up for every single one, and put me (at 13-15) on as an Authorized user. I never used a single card.
She is terrible with money and ran each one up to and over the limits and then couldn't pay them off. She'd make a payment here and there over the years... Totally ruined my credit before I was 18. : Some of them are still showing on there (at 30) because she recently filed for bankruptcy and they defaulted to me.
She also put me down as a responsible party for some of her medical bills! I've spent a ton of time trying to sort this nightmare out...
post #13 of 21
3/22/08 at 7:29pm
Thread Starter 
Quote:
Originally Posted by DawnaRose View Post
just don't do what my mom did! (not that I think you would!)

right after she and my dad divorced she started getting tons of credit card offers and calls, she signed up for every single one, and put me (at 13-15) on as an Authorized user. I never used a single card.
She is terrible with money and ran each one up to and over the limits and then couldn't pay them off. She'd make a payment here and there over the years... Totally ruined my credit before I was 18. : Some of them are still showing on there (at 30) because she recently filed for bankruptcy and they defaulted to me.
She also put me down as a responsible party for some of her medical bills! I've spent a ton of time trying to sort this nightmare out...
OMG that is awful Dawn! I can't imagine what she was thinking, and can only imagine the nightmare of trying to sort that out.
post #14 of 21
3/22/08 at 7:47pm
Quote:
Originally Posted by llamalluv View Post
It won't work. Generally, authorized users do not get the information reported to the credit bureaus. I know this is the case with AMEX - they changed their policy recently due to fraud.

Dh is an auth user on my visa and it is reported on his credit report, I've seen it on there myself.
post #15 of 21
3/23/08 at 3:58am
Quote:
Originally Posted by DawnaRose View Post
She also put me down as a responsible party for some of her medical bills! I've spent a ton of time trying to sort this nightmare out...
Yikes, not exactly mother of the year material.
post #16 of 21
3/23/08 at 6:41am
If someone's credit card is listed on your credit report when you are only an AU, and it is harmful to you, write to all three bureaus with a "not my account" objection. It should be removed. You are not legally responsible when you are an AU only.
post #17 of 21
3/23/08 at 5:01pm
Quote:
Originally Posted by llamalluv View Post
It won't work. Generally, authorized users do not get the information reported to the credit bureaus.
this. my names on a couple of my moms (just turned 21) but i have no credit. it hasnt helped at all.
post #18 of 21
3/23/08 at 6:30pm
Quote:
Originally Posted by Carlyle View Post
My parents did a really neat thing with me as a teen to help me learn to manage money responsibly. They gave me a "clothes allowance" for the year.

Basically, they figured out how much they were spending on clothing for me each year, tacked on a little extra money, and then said "We're giving you $X per year for clothing. You can spend it however you want. It has to cover everything (including the boring underwear/socks), so you should plan for those things. Also, if you spend it all by halfway through the year, we aren't giving you more until next year.

It was a great way for me to learn to handle money wisely (they even gave me a little account book to track how much I'd spent/on what/how much was left), and it also gave me a really nice feeling of autonomy in buying my own clothes (and not having to ask them for permission to buy a really nice expensive dress or something).

It wasn't a credit card, but I think it taught me much more in the long run.
I totally agree with this. My parents did something similar, except instead of one chunk at the beginning of the year, I got it as a weekly allowance that had to cover clothes, toothpaste, shampoo, etc, plus anything 'for fun'. I loved it because of the feeling of autonomy and it taught me to handle money. I think I was around 13 when this started. I never had a credit card until I had my own source of income.
post #19 of 21
3/24/08 at 10:14am
Quote:
Originally Posted by onelilguysmommy View Post
this. my names on a couple of my moms (just turned 21) but i have no credit. it hasnt helped at all.
Apparently your mom needs different cards!

I know that since AMEX changed their policy, other companies have been following suit because of the fraud issue.
post #20 of 21
3/24/08 at 10:52am
Quote:
Originally Posted by superstella View Post
I think it depends on the card though, doesn't it?
Isn't that what I said?
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